If the workforce reductions announced in recent days are mainly due to specific problems of the companies concerned, the business fabric as a whole is showing signs of weakness in France.
The aftershock of the inflationary crisis is now. For several months now, announcements of social plans have been making headlines more and more often. If this week in November was marked by upcoming job cuts within the two French flagships Auchan and Michelin, other large companies have since the start of the year announced that they want to downsize.
2024 got off to a bad start with an announcement in January of staff cuts at Vinci Immobilier, quickly followed by those at Nexity and Bouygues Immobilier. The contagion continued in other sectors such as that of automobile equipment manufacturers which are undergoing the electrification of vehicle production.
Valeo thus indicated that it was going to let go of 1,150 employees and sell three sites in arrears. Later it was the rim manufacturer Imperial Wheels and the subcontractor of Stellantis MA France which closed down, leaving more than 500 employees in the lurch.
Food distribution was not left out and also fueled the social column with Auchan recently and Casino Plus, which confirmed in September that its new small structure would have to reduce the number of jobs by 3,000.
A list far from being exhaustive since we can add Sanofi which has cut its R&D or even Société Générale which has proposed voluntary departure plans to hundreds of employees.
Special cases
Do these high-profile announcements within these large groups hide a forest of French companies in great difficulty?
Thierry Millon, the director of studies at Altarès, wants to put things into perspective.
“We were previously on a growth dynamic, but there were still social plans,” he recalls. “The difference is that it now concerns big, well-known players.”
Companies that the economic situation does not help, but which have been experiencing structural difficulties for several years.
Let’s take auto parts manufacturers and Michelin for example. These manufacturers face Chinese competition which is gaining strength year after year. Moreover, a previous social plan was implemented in 2021 in a year that was nevertheless prosperous in terms of growth for the economy.
Same for Auchan. The northern distributor did not wait until 2024 to experience difficulties. For more than a decade now, the retailer has been losing market share, handicapped as it is by store formats less popular with consumers.
Although we should perhaps not draw general truths from this sum of particular cases, the fabric of French companies still shows signs of feverishness as a whole.
Real threats
“We have on average in a normal situation around 250 companies in liquidation or recovery each month, indicates Thierry Millon of Altarès. Since the beginning of the year we are rather between 350 and 380 and in October we rose to 520. There is indeed a fragile situation.”
Concerning the number of jobs threatened by cessations of activity, Altarès predicted at the start of the year that it would reach 250,000 in 2024. However, this number was already reached at the end of October, two months earlier than expected. Between now and the end of the year, some 40,000 more job losses are expected.
The causes of this depression are known. Business is not good, order books are dwindling and the outlook does not encourage dynamism.
“When you read on Monday morning that Auchan is making redundancies you say to yourself “do I have to invest as a small business in order to hope to have business?”, illustrates Thierry Millon.
The two engines of French growth, household consumption on the one hand and business investment on the other, have been stalled.
Despite the cuts in consumer prices and interest rates, household confidence has not recovered. The savings rate remains at very high levels and the context of public finances and the prospects of tax increases are not likely to encourage households to spend more.
Investment at half mast
Regarding businesses, the geopolitical context, Chinese competition, the threat of a customs war with the United States with the return of Donald Trump or the logistics costs which remain high are all reasons to err on the side of caution.
The particular French context doesn't help matters. The expected tax increases on businesses and the reimbursement of EMPs from the Covid era which can represent up to 5% of annual turnover are serious handicaps. The reduction in interest rates which makes credit more accessible is not a sufficient incentive to invest.
The impact in the industry is already visible. In the first half of 2024, the balance between opening and closing of sites became negative at -8, according to Bercy data, while it had been positive for several years. Taking into account the extensions and reductions of existing sites, it remains slightly positive (+36) but much less than in 2023 (+105 in the first half of last year).
It is in transport and in particular in the automobile sector that the cuts are most significant. Over the first six months of the year, the country recorded 12 site closures, five reductions for barely one opening and three extensions. It is perhaps from this sector that future bad news for employment will come.
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